Numerous dairy firms enjoy profit growth in Q3

 

Hanoi (VNS/VNA) - A number of dairy companies reported positive earning results in the third quarter of this year after restructuring their businesses.

Vietnam's largest dairy producer Vinamilk expected that revenue and profit would increase 9 percent and 16 percent, respectively, to reach 15.5 trillion VND (668.7 million USD) and 3.1 trillion VND.

In the first nine months, Vinamilk estimated revenue and profit would total 45.3 trillion VND and 9 trillion VND, both up 7 percent.

As the company targets to earn 10.7 trillion VND in 2020, it has fulfilled 84 percent of the target after nine months.

BIDV Securities Company even forecast that Vinamilk would achieve 11.3 trillion VND this year, up 6.8 percent. The estimated result is based on advertising cost cuts and financial revenue increases.

Moc Chau Dairy Cattle Breeding Joint Stock Company (Moc Chau Milk) reported revenue of 775 billion VND in the third quarter this year, up 14 percent year-on-year.

Gross profit margin reached 34.6 percent, a sharp rise compared to those of 18-19 percent in previous years but still less than Vinamilk's gross profit margin of over 45 percent.

The company achieved 102 billion VND in post-tax profit in Q3, up 113 percent year-on-year. It attributed the hike in profit to its effective cost management, proper supporting policies to distributors and customers.

In the first nine months, Moc Chau’s revuenue reached 2.1 trillion VND, up 10 percent. Post-tax profit rose 69 percent to touch 209 billion VND, surpassing 33 percent of the yearly target.

The company spent a large amount of 370 billion VND in advertising activities, doubling that of the first nine months in 2019.

The International Dairy Products Joint Stock Co (IDP), one of Vietnam’s home-grown dairy product firms, reported gross profit margin reaching 41.7 percent in the third quarter, approximately that of Vinamilk although the company has a smaller scale compared to the dairy giant.

IDP’s post-tax profit in Q3 reached 159 billion VND, 4.2 times higher than the last year and that of the first nine months was 309 billion VND, 3.3 times higher than 2019.

As IDP suffered continuous losses in the 2016-2018 period, it still reported a total loss of 270 billion VND in the first nine months. Net revenue totalled nearly 2.8 trillion VND in the period.

The company has recently approved Blue Point to buy 90 percent of the stakes without a public bid. Blue Point was established in 2015 and specialises in consumer goods manufacturing. The group previously expressed an ambition to set foot in the dairy and pharmaceutical sector to become one of Vietnam’s largest consumer-retail groups.

IDP has also released information that Howard Holding PTE managed by VinaCapital sold a 28 percent stake in IDP to decrease its ownership to 26 percent. At present, this investment fund and relevant parties are holding 37 percent stake.

Previously, in December 2014, VinaCapital Vietnam Opportunity Fund and Japan's Daiwa PI Partners invested approximately 45 million USD to take a 70 percent stake in IDP.

Established in 2004, IDP has the main trademark of Ba Vi for its milk products, which includes fresh milk and yoghurt. It also has other products such as z'Dozi and Purina fresh milk.

Hanoimilk JSC (HNM) reported profit of 847 million VND in Q3, 3.8 times higher than the previous year. Net revenue soared 90 percent to reach 58 billion VND. Gross profit margin was 26.8 percent.

In nine months, net revenue rose 23 percent to 150 billion VND. But the company suffered a loss of 28 billion VND in the period.

Established in 2001, Hanoimilk used to be a major player in the dairy industry in Vietnam, thriving the most in 2006-07 period thanks to the IZZI milk brand. However, the melamine incident in 2008 and ineffective out-of-industry investments caused the business to suffer heavy losses, and were further outstripped by big rivals. The company has returned to be profitable in the last two years.

Experts from SSI Research stated that the domestic dairy products were less affected by COVID-19 than fast-moving consumer goods (FMCG) products.

However, milk demand of low-income consumers could still be affected and average selling prices will not increase in 2021, said SSI Research.

Although domestic brands are dominating the market, SSI Research forecasts competition from foreign brands will become stiffer as the EVFTA will remove tariffs on European dairy products in the coming years./.